PAUL G. GORMAN, PETITIONER V. UNITED STATES OF AMERICA
No. 86-1625
In the Supreme Court of the United States
October Term, 1986
On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Sixth Circuit
Brief for the United States in Opposition
TABLE OF CONTENTS
Opinion below
Jurisdiction
Questions presented
Statement
Argument
Conclusion
OPINION BELOW
The opinion of the court of appeals (Pet. App. A1-A11) is reported
at 807 F.2d 1299.
JURISDICTION
The judgment of the court of appeals was entered on December 23,
1986. A petition for rehearing was denied on February 6, 1987 (Pet.
App. B1). The petition for a writ of certiorari was filed on April 2,
1987. The jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).
QUESTIONS PRESENTED
1. Whether a public official who receives lucrative offers of
future employment and unsecured loans in return for the performance of
an official act has received "anything of value" within the meaning of
the illegal gratuity statute, 18 U.S.C. 201(g).
2. Whether the proof at trial varied from the indictment in a way
that prejudiced petitioner.
3. Whether the evidence was sufficient to support petitioner's
conviction for participating as a public official in a matter in which
he had a conflict of interest.
STATEMENT
Following a jury trial in the United States District Court for the
Northern District of Ohio, petitioner was convicted on one count of
participating in a matter in which he had a conflict of interest, in
violation of 18 U.S.C. 208(a), and on one count of receiving illegal
gratuities, in violation of 18 U.S.C. 201(g). He was sentenced to
concurrent terms of a year and a day in prison. Pet. App. A1.
1. The evidence at trial is summarized in the opinion of the court
of appeals (Pet. App. A2-A5). In brief, the evidence showed that in
late 1982 and early 1983 petitioner solicited personal loans and a
lucrative offer of employment from co-defendant Merle Weber while
petitioner served as an Economic Crime Specialist and an Assistant
United States Attorney in the Office of the United States Attorney for
the Northern District of Ohio. The evidence also showed that Weber
had a substantial financial interest in an investigation petitioner
was conducting at the time and that petitioner provided Weber with
confidential information about the investigation.
During proceedings involving the bankruptcy of James Hartley,
information came to light that implicated Hartley and several banks in
a check-kiting scheme. Petitioner was the lead prosecutor
investigating that scheme, an assignment he performed between August
1982 and April 1983. Co-defendant Merle Weber was a creditors'
representative who had been retained in connection with the Hartley
bankruptcy by a number of Hartley's creditors under an agreement that
would have paid Weber 10 percent of the funds recovered by those
creditors. During the time he represented the creditors, Weber became
of the opinion that Hartley had engaged in a massive check kiting and
illegal bank stock transfer scheme with several banks. Weber
concluded that if the scheme could be proved, it could result in a
recovery of $12.5 million for the creditors, which would produce a
$1.25 million fee for Weber. Pet. App. A2.
In the summer of 1982, Weber sought to enhance his leverage over
the banks against which the creditors had potential claims by
augmenting his efforts with the threat of a criminal investigation.
It was Weber's hope that the potential liability and attendant
publicity of a criminal proceeding would stimulate the banks to settle
quickly with the creditors. To that end, Weber met with petitioner
and urged that he institute a criminal investigation of various banks
and individuals associated with Hartley. Petitioner indicated that he
would pursue the case. Shortly after that initial meeting, petitioner
prepared a document listing the persons involved in the Hartley matter
and the charges that could be brought against them, and he forwarded
the document to Weber. Petitioner also kept Weber apprised of the
grand jury proceedings in the Hartley case and discussed, among other
things, how to time grand jury subpoenas to put extra pressure on the
banks to settle Weber's claims. Pet. App. A2-A3.
On at least two occasions -- shortly after their initial meeting
and again in February 1983 -- petitioner discussed his prospects for
employment with the creditors' representative business that Weber and
his assistant, Christine DeSanctis, planned to establish with the
proceeds from the Hartley case. At a meeting in DeSanctis's apartment
in August 1982, petitioner told DeSanctis that, as a condition of
employment, he would require a guarantee in advance of two years'
salary -- a total of $300,000. That money, petitioner said, should be
placed in an escrow account, with the funds to be provided either by
Weber or by two Hartley creditors who faced potential criminal
liability. Petitioner added that if the money were provided by the
creditors, then petitioner's report on the Hartley case would
discourage prosecution of those creditors. Petitioner repeated his
demands to Weber in February 1983. Weber allowed petitioner to
believe his conditions would be met. When petitioner pressed the
issue, however, Weber stalled. The two eventually had a falling out
on March 30, 1983. The Hartley criminal investigation was closed,
without prosecution of the banks, in April 1983. Pet. App. A3-A4.
/1/
Throughout the period that he worked on the Hartley matter,
petitioner experienced severe financial difficulties, including a
$25,000 cost overrun in the construction of a new residence. In early
November 1982, petitioner agreed to accept a $25,000 loan from Weber.
When Weber failed to produce the funds by Christmas 1982, petitioner
flew unannounced from Toledo, Ohio, to Phoenix, Arizona, to demand the
money personally. Weber was in Montana at the time, and petitioner
eventually reached him by telephone. Petitioner told Weber he needed
$2,000 that day to pay his contractors' bills and that if he did not
receive the money he would lose his job and the Hartley investigation
would be closed. On December 27, 1982, Weber arranged for $2,000 in
cash to be taken from the account of the Chairman of the Board of the
People's Bank of McComb, Ohio, and to be delivered to petitioner's
wife at a motel in Findlay, Ohio. The evidence showed that this
transaction was structured as a loan from the bank chairman to Weber
for the purpose of making a loan to petitioner. On December 28, 1982,
a loan in the amount of $3,500 was made to petitioner using a similar
procedure. Pet. App. A4.
On January 3, 1983, petitioner demanded an additional $10,000 from
Weber, again under the threat that petitioner would lose his job and
the Hartley investigation would be closed if petitioner did not
receive the money. Weber again called the bank chairman and arranged
for petitioner immediately to receive a $10,000 unsecured personal
loan from the McComb bank. /2/ Pet. App. A4.
2. Petitioner challenged his convictions on a number of evidentiary
grounds. The court of appeals affirmed (Pet. App. A1-A11).
a. With regard to the conflict of interest count, the court of
appeals rejected each of the four challenges petitioner raised to the
sufficiency of the evidence. /3/ First, the court concluded that the
evidence showed that, during the relevant period, petitioner was
"negotiating * * * concerning prospective employment" within the
meaning of the statute. The court observed (Pet. App. A6) that while
petitioner was investigating the Hartley matter, he met separately
with DeSanctis and Weber and on each occasion furnished a "list of his
conditions for taking employment with Weber." The court concluded that
"(t)his in itself is clearly enough evidence for the jury to conclude
beyond a reasonable doubt that (petitioner) had been 'negotiating'
with Weber for employment" (ibid.).
The court also rejected petitioner's claim that any negotiations
that may have taken place occurred only after the Hartley
investigation ended. The court observed (Pet. App. A6-A7) that
petitioner and DeSanctis first spoke about prospective employment in
August 1982, that petitioner discussed the same subject with Weber in
February 1983, and that the Hartley investigation was not closed until
April 1983.
The court similarly rejected the proposition that Weber had no
financial interest in the outcome of the criminal investigation into
Hartley's financial affairs. The court concluded that Weber's 10
percent contingent fee arrangement with Hartley's creditors entitled
the jury "to find that Weber stood a real possibility of sustaining
financial gain or loss as a result of (petitioner's) official actions"
(Pet. App. A7). Finally, the court found the evidence sufficient to
show that petitioner knew that Weber stood to benefit from the Hartley
investigation. The court stated (id. at A8) that petitioner "kept
Weber and DeSanctis fully apprised of confidential grand jury
activity" in the case and "repeatedly threatened Weber with the ruin
of the criminal investigation of the banks if he did not immediately
receive loans" (ibid.).
b. The court also rejected petitioner's challenges to his
conviction for receiving illegal gratuities. /4/ It found no merit to
petitioner's claim (see Pet. App. A9) that only cash or cash
equivalents fall within the scope of the statutory prohibition and
therefore that the loans and promises of future employment he
solicited did not constitute "anything of value" within the meaning of
the statute. The court observed (ibid.) that there is no authority
for petitioner's narrow reading of the statute and that in order to
serve the purpose of the statute, "the term 'thing of value' must be
broadly construed." Relying on United States v. Williams, 705 F.2d
603, 623 (2d Cir.), cert. denied, 464 U.S. 1007 (1983), the court held
that "the value which the defendant subjectively attaches to the items
received" is relevant for purposes of determining whether such items
are "anything of value" under the statute (Pet. App. A9).
The court then turned to the particular "things" petitioner
solicited from Weber -- loans, which he ultimately repaid, and an
offer of future employment. Both of those benefits, the court
concluded, are "things of value" under the statute. The loans in
question constituted "things of value" because, unlike the loan
petitioner later obtained from a commercial bank, the loans from Weber
were obtained on extremely short notice, were unsecured, and contained
none of the strict conditions that were imposed in connection with the
commercial loan. As the court of appeals stated, "the numerous
conditions of the (commercial) loan * * * strongly indicate that
(petitioner) could not have received substantial unsecured loans at
all, much less on extremely short notice. The receipt of such loans
from Weber therefore would have had an objective, as well as a
subjective, value to (petitioner)" (Pet. App. A9).
The court also concluded that Weber's offer of a job was a "thing
of value." The court rejected petitioner's argument that "any
compensation received would have been for additional duties performed"
(see Pet. App. A10), observing that petitioner's salary as an employee
of Weber's would have been three times his government salary and that
one of the conditions of his employment with Weber was that he remain
with the United States Attorney's office and that he "us(e) that job,
in part, to refer cases to Weber" (ibid.). The court further
concluded that, "(c)onsidering (petitioner's) precarious financial
situation," an offer of future employment would clearly have been
valuable to petitioner (ibid.).
The court similarly found no merit to petitioner's challenge to the
sufficiency of the evidence showing that he performed an "official
act" in exchange for receiving a thing of value. As the court stated,
"(w)ith respect to the loans, * * * (petitioner) repeatedly threatened
Weber that his investigation of the Hartley bankruptcy would end if he
did not receive the loans he requested" (Pet. App. A10). Likewise,
with respect to the offer of employment, the court concluded that the
offer was in connection with an "official act" because it was
contingent upon petitioner's remaining an Assistant United States
Attorney and thereby "referring Hartley-type cases to Weber" (ibid.).
Finally, the court rejected petitioner's claim that a variance
existed between the indictment and the proof at trial. Petitioner
argued (see Pet. App. A11) that the indictment charged him with
receiving loans from Weber totaling $23,000, when in fact Weber lent
him only $13,000, with the remaining $10,000 coming from the People's
Bank of McComb, Ohio. But the court of appeals noted that the
indictment charged petitioner with receiving a total of $23,000 in
loans "directly and indirectly" from Weber, and the evidence
established that those loans petitioner did not receive directly from
Weber he received indirectly, since it was Weber who arranged the
$10,000 unsecured loan from the McComb bank (ibid.).
ARGUMENT
1. Petitioner renews (Pet. 13-33) his claim that he did not receive
"anything of value" from Weber within the meaning of 18 U.S.C. 201(g),
and he asserts that the decision of the court of appeals to the
contrary conflicts with decisions of other courts of appeals.
Specifically, he claims that every other court that has considered the
issue has concluded that to violate Section 201(g), a government
official must solicit or receive compensation additional to his
official salary "in the forms of gifts or gratuities for (his)
official acts * * *" (Pet. 14 (emphasis omitted)). Petitioner's
attempt to limit the reach of the statute, however, is unsupported by
the case law upon which he relies.
Petitioner correctly notes (Pet. 8-19, 23-24) that several courts
of appeals have described Section 201 as prohibiting the receipt by
public officials of "additional compensation or a tip or gratuity for
or because of an official act." United States v. Irwin, 354 F.2d 192,
196 (2d Cir. 1965). See United States v. Brewster, 506 F.2d 62, 72-73
n.26 (D.C. Cir. 1974) (Section 201 prohibits inter alia the payment to
"an official (of) a sum which he is not entitled to receive"); United
States v. Evans, 572 F.2d 455, 480 (5th Cir.), cert. denied, 439 U.S.
870 (1978) (Section 201 "reach(es) any situation in which the judgment
of a government agent might be clouded because of payments or gifts
made to him by reason of his position"). But each of those cases
involved a defendant who made cash payments to public officials.
Those courts did not conclude, or even suggest, that the scope of
Section 201 is limited exclusively to cash payments. Instead, each
court recognized -- as did the court of appeals in this case (see Pet.
App. A9) -- that Section 201 casts a larger net. Thus, in Evans, the
Fifth Circuit noted that Section 201 is to be "broadly construed" (572
F.2d at 480). Accord United States v. Williams, 705 F.2d 603, 623 (2d
Cir.), cert. denied, 464 U.S. 1007 (1983). And in Brewster, the
District of Columbia Circuit noted only that Section 201 is
"primarily," but not exclusively, concerned with cash payments (506
F.2d at 72 n.26). See also United States v. Schwartz, 785 F.2d 673,
680 (9th Cir. 1986), cert. denied, No. 85-2031 (Oct. 14, 1986) (a
"thing of value" is "not limited * * * to tangible things with an
identifiable commercial price tag"). /5/ As the loans and job offer
were plainly things of value to petitioner, the court of appeals did
not err in affirming his conviction under Section 201(g). /6/
2. Petitioner contends (Pet. 37-51) that the evidence at trial on
the gratuity count varied from the indictment in three respects: (1)
the evidence established that Weber directly lent him $13,000 and
arranged for an additional bank loan of $10,000, but the indictment
failed to charge him with receiving the proceeds of loans "arranged
through * * * Weber" (id. at 38 (emphasis in original)); (2) the
prosecution introduced evidence that petitioner solicited bribes from
certain investigative targets, yet it failed to charge him with
accepting bribes in violation of 18 U.S.C. 201(c) (Pet. 42-46); and
(3) the evidence showed that petitioner negotiated with both Weber and
DeSanctis, while the indictment charged him with negotiating only with
Weber (id. at 46-51).
Petitioner failed to raise the latter two variance claims below,
and he is therefore foreclosed from raising them in this Court for the
first time. United States v. Lovasco, 431 U.S. 783, 788 n.7 (1977);
Adickes v. S.H. Kress & Co., 398 U.S. 144, 147 n.2 (1970); Lawn v.
United States, 355 U.S. 339, 362 n.16 (1958). In any event, all three
claims are entirely lacking in merit.
Petitioner's first contention was answered by the court of appeals.
The court noted that the indictment charged petitioner with
"'directly and indirectly * * * receiv(ing) things of value from * * *
Weber, that is, loans totaling $23,000'" (Pet. App. A11). The
evidence at trial, moreover, established that Weber directly lent
petitioner $13,000 and indirectly provided an additional $10,000 by
arranging for petitioner to receive that sum from a bank immediately,
and without posting any security (see id. at A4).
The remaining contentions -- which petitioner did not raise below
-- are equally unfounded. First, he claims that the prosecution
introduced evidence that he solicited a bribe, yet charged him only
with what he characterizes as the lesser included offense of
soliciting and receiving a gratuity. The evidence to which he points
in support of this claim is DeSanctis's testimony that petitioner said
that his requested annual salary of $150,000 could be paid either by
Weber or by two Hartley creditors who faced potential criminal
liability (see Pet. App. A3). But this evidence was surely probative
of petitioner's guilt on the gratuity charge. And, while the evidence
also might have been probative if petitioner had been charged with
bribery, /7/ that does not diminish its admissibility to establish, as
one element of the gratuity charge, that petitioner, with criminal
intent, solicited the employment offer from Weber and DeSanctis "for
or because of any official act * * * to be performed by him" (18
U.S.C. 201(g)). /8/
Petitioner's remaining claim of variance is similarly without
support. He asserts that while the indictment charged him with
negotiating concerning future employment exclusively with Weber, the
evidence at trial established that he negotiated with DeSanctis as
well. The indictment charged that "(d)uring the period August 1982,
through April 1983, (petitioner) was negotiating concerning
prospective employment with Merle C. Weber." The evidence at trial
established that DeSanctis worked for Weber, that she and Weber
together approached petitioner for the first time on August 10, 1982,
in an effort to persuade him to expedite his investigation of the
Hartley matter, and that DeSanctis subsequently told petitioner that
she and Weber planned to form a business together (see Pet. App.
A2-A3). The evidence also established that petitioner and DeSanctis
first discussed petitioner's future employment on August 27, 1982, and
that they did so with the understanding that the decision whether to
employ petitioner was Weber's (id. at A3). The evidence therefore
conformed to the indictment and established that petitioner negotiated
for future employment beginning in August 1982 and that he did so with
Weber or with someone acting on Weber's behalf. /9/
3. Petitioner renews (Pet. 51-64) his challenge to the sufficiency
of the evidence supporting his conflict of interest conviction. This
factbound claim is entirely lacking in merit and does not warrant
further review.
Petitioner suggests (Pet. 51-54) that even if Weber had a
"financial interest" in the banks petitioner investigated, the Hartley
investigation was concluded in January 1983, and that petitioner and
Weber did not negotiate concerning future employment until February
1983. Hence, he asserts, he was not properly convicted on the
conflict of interest count, as he did not, within the terms of Section
208(a), "participate() * * * in a * * * proceeding" at any time during
which, "to his knowledge * * * any person * * * with whom he (was)
negotiating * * * concerning prospective employment, ha(d) a financial
interest * * *." Even were it true, as petitioner claims, that his
investigation terminated in January 1983, he still would properly have
been convicted under Section 208, as his first negotiations about
prospective employment with Weber commenced in August 1982. /10/ In
any event, petitioner's assertion that the investigation ended in
January 1983 is incorrect, as the court of appeals concluded (Pet.
App. A6-A7). The evidence at trial established that while Hartley
agreed to plead guilty in January 1983, petitioner continued to
debrief him, in an effort to collect evidence against creditors
(including the banks in question), well after petitioner's meeting
with Weber in February 1983 (see Tr. 797-798, 1217-1218). /11/
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
CHARLES FRIED
Solicitor General
WILLIAM F. WELD
Assistant Attorney General
MAURY S. EPNER
Attorney
JUNE 1987
/1/ Petitioner's discussions with DeSanctis and Weber about future
employment were not limited to those two occasions. As the court of
appeals noted (Pet. App. A3), petitioner frequently broached the
subject of working for the creditors' representative business that
Weber and DeSanctis proposed to establish and suggested that his
position with the United States Attorney's office gave him access to
information that would be of great benefit to that venture.
/2/ Petitioner subsequently repaid Weber and the bank with interest
(although without late fees) on May 6, 1983. In order to do so, he
obtained a loan from the Huntington Bank in Toledo under stringent
conditions and financial monitoring procedures required by the bank:
petitioner had to encumber his residence with a third mortgage,
destroy his credit cards, develop a financial recovery plan for
periodic review by the bank, attempt to sell his house, and arrange
for his wife to return to work. Pet. App. A5.
/3/ The federal conflict of interest statute, 18 U.S.C. 208(a),
prohibits any officer or employee of the Executive Branch from
participating in any matter or proceeding "in which, to his knowledge,
he, * * * or any person or organization with whom he is negotiating *
* * concerning prospective employment, has a financial interest * *
*."
/4/ The federal gratuities statute, 18 U.S.C. 201(g), prohibits a
public official from directly or indirectly soliciting or receiving
"anything of value for himself for or because of any official act
performed or to be performed by him."
/5/ The other cases cited by petitioner (Pet. 14) do not help him
at all. In United States v. Umans, 368 F.2d 725, 728 (2d Cir. 1966),
the court merely stated that the gratuities statute requires proof
"that payment was made to an agent in a situation where no payment was
necessary"; nothing in the court's opinion suggests that the gratuity
(or "payment") must be in cash or a cash equivalent. United States v.
Niederberger, 580 F.2d 63 (3d Cir.), cert. denied, 439 U.S. 980
(1978), and United States v. Hare, 618 F.2d 1085 (4th Cir. 1980), do
not address the issue; to the extent that they are pertinent at all,
they support the analysis of the court of appeals, as both cases
involved gratuities other than an outright gift of cash -- a golfing
trip in one case and a loan under favorable conditions in the other.
/6/ Petitioner suggests (Pet. 33-37) that the court of appeals
failed to locate evidence in the record establishing that he sought
the loans or the employment offer "for or because of any official act
performed or to be performed by him." This claim is frivolous. The
court of appeals found clear evidence of petitioner's unlawful intent
in the fact that he "threatened Weber that his investigation of the
Hartley bankruptcy would end if he did not receive the loans he
requested" and agreed to remain in the government "while working with
Weber at least in part for the purpose of referring Hartley-type cases
to Weber" (Pet. App. A10).
/7/ The federal bribery statute, 18 U.S.C. 201(c), imposes criminal
liability on a government official or employee who "corruptly asks,
demands, exacts, solicits, seeks, accepts, receives, or agrees to
receive anything of value" in return for "being influenced in his
performance of any official act."
/8/ If, despite his characterization of this contention as a claim
of "variance," petitioner instead means to argue that the probative
value of the evidence was outweighed by the danger of unfair prejudice
(see Rule 403, Fed. R. Evid.), that argument, which in any event is
incorrect, is also foreclosed by the record in this case. The
evidence that petitioner now protests was admitted at trial without
objection (see Tr. 20-21) and was the subject of cross-examination
(id. at 79-80). Petitioner did not challenge the evidence in the
court of appeals.
Similarly, if petitioner means to suggest that there is a
possibility the jury was confused about the precise charge against
petitioner, that contention would be fully answered by the district
court's instructions to the jury. Those instructions (Tr. 1242-1247),
which petitioner did not challenge below, clearly and correctly
defined the elements of an illegal gratuity offense.
/9/ In any event, petitioner fails to show how he could have been
prejudiced in any way by the asserted variance. See United States v.
Miller, 471 U.S. 130, 134-135 (1985).
/10/ To the extent that petitioner contends that he was not engaged
in "negotiation(s)" over future employment (see Pet. 46-49), he is
clearly mistaken. Indeed, the discussions of petitioner's future
employment with Weber resulted in an agreement by Weber to meet the
conditions that petitioner had insisted on as the terms of his
employment (see Pet. App. A3-A4), which clearly constitutes
"negotiation" under any construction of the term. The case on which
petitioner relies, United States v. Conlon, 628 F.2d 150 (1980) (rev'g
dismissal of indictment), 661 F.2d 235 (D.C. Cir.) (on appeal from
conviction), cert. denied, 454 U.S. 1149 (1982), does not support his
claim. That case held that the term "negotiating" in Section 208(a)
must be given a "broad reading" consistent with its ordinary meaning,
628 F.2d at 155, which plainly encompasses the conduct proved in this
case.
/11/ Petitioner's related assertions that Weber had no "financial
interest" in the Hartley matter (Pet. 55-63) and that even if Weber
had a financial interest petitioner was unaware of it (id. at 63-64)
are wholly without merit. The evidence plainly showed that Weber
stood to gain up to $1.25 million if he persuaded the banks in
question to settle their disputes with the trustee in bankruptcy and
that the threatened criminal prosecution would have put enormous
pressure on the banks to settle (see Pet. App. A2). Likewise, the
evidence established that petitioner was well aware of Weber's
financial stake in the matter; there was testimony that petitioner
repeatedly threatened Weber that if the money petitioner demanded was
not forthcoming, petitioner would scuttle his investigation of the
banks and thereby diminish Weber's bargaining leverage.